NagaCorp, a leading gaming operator in Cambodia, has received a ‘B’ rating from S&P Global Ratings, with a stable outlook for 2024. This assessment reflects a balanced view of the company’s financial health and future prospects.
Debt Repayment and Refinancing Risk Reduction
In July 2024, NagaCorp made significant strides in reducing its refinancing risk by repaying its outstanding senior unsecured notes. This move has substantially strengthened the company’s financial footing, allowing it to focus on other strategic initiatives.
Cash Flow Management and Cost Control
Since 2022, NagaCorp has implemented rigorous cash flow management strategies. The company has limited cash dividends and has strategically reduced capital expenditure (capex) to under $165 million over the past four years. This conservative approach has helped in maintaining liquidity and ensuring operational stability.
Strengthened Liquidity Through Shareholder Loan
To bolster its financial position further, NagaCorp drew down a $70 million shareholder loan. This infusion of capital has significantly enhanced the company’s liquidity, providing a buffer against potential financial uncertainties.
Strategic Delay of Naga3 Project
NagaCorp has announced a strategic extension of the completion date for its Naga3 project. Originally set for an earlier completion, the project’s deadline has now been pushed to September 2029. This delay allows the company to better manage its resources and focus on recovering from the impact of the COVID-19 pandemic.
Post-Repayment Cash Balance
Following the repayment of its notes, S&P estimates that NagaCorp will have a cash balance of approximately $80 million. This remaining cash provides a cushion for ongoing operations and future investments.
Impact of COVID-19 on Gaming Operations
The COVID-19 pandemic has had a profound impact on NagaCorp’s gaming operations. The elimination of Chinese junket operators, who previously contributed 70% of the company’s gross gaming revenue (GGR), has significantly affected overall performance.
Pre-COVID vs. Current Financial Performance
In 2019, NagaCorp reported impressive financial figures with revenue at $1.8 billion and EBITDA at $667 million. However, by 2023, these numbers had declined sharply. The company’s reported revenue for 2023 was $533 million, and EBITDA stood at $292 million, reflecting decreases of 30% and 44% respectively compared to 2019.
Future Financial Projections
S&P’s estimates indicate that by 2025, NagaCorp’s reported revenue and EBITDA will reach only 38% – 42% and 53% – 57% of pre-COVID levels, respectively. This projection underscores the long-term challenges the company faces in recovering to its previous financial performance.
Leadership Changes
In May 2024, NagaCorp announced the resignation of its Finance and Treasury CEO. This leadership change marks a significant development in the company’s ongoing efforts to stabilize and enhance its financial management capabilities.
NagaCorp’s journey through the financial challenges posed by the pandemic highlights its strategic efforts to manage debt, control costs, and strengthen liquidity. While the company faces ongoing hurdles in returning to pre-COVID performance levels, its current strategies and S&P’s stable outlook provide a foundation for cautious optimism. Moving forward, the company’s ability to adapt and innovate will be crucial in navigating the evolving gaming industry landscape.